New Book That Explains How to Defeat or Deter Insurance Fraud

Read the full article at https://www.linkedin.com/pulse/insurance-fraudsters-deserve-quarter-barry-zalma-esq-cfe/ and at https://zalma.com/blog plus more than 4150 posts. 

How Giving No Quarter Worked

Many years ago a client I represented was offended that an insured tried to defraud him and the people who were names in the syndicate he represented at Lloyd’s, London. I walked the Underwriter through the debris of the house that was burned, showed him some of the remains of the allegedly highly valuable fine arts, and then explained how he was deceived into issuing the policy. I was the attorney for Lloyd’s underwriters for the fine arts and Imperial Casualty for the homeowners policy. Once it became clear to the Underwriter I was given the following instruction:

“Take No Prisoners!” The military instruction to give no mercy to the enemy. Typically if you give or grant no quarter, you treat someone—usually an opponent or foe of some kind—harshly. You don’t take pity on them or give them any leeway or concession. That is what I did. The claim was denied, the policy was rescinded, and the bad faith suit that resulted was litigated without quarter or concession. It took more than five years, a motion for summary judgment, an appeal, and eventually a judgment in favor of the insurers that resulted in payment to the insurers of every dollar advanced and every dollar expended in investigation and defense of the bad faith suit. That was followed by suits against the claims adjuster, death threats and a bomb threat that took 15 years of my professional life. [Imperial Casualty & Indemnity Co. v. Sogomonian, 243 Cal.Rptr. 639, 198 Cal.App.3d 169 (Cal. App. 1988).]

After Mr. Sogomonian and his co-defendants were compelled to pay fraudulent claims against Imperial and the Lloyd’s underwriters dropped precipitously. Giving no quarter to a fraud perpetrator not only defeated a fraudulent claim but deterred others from attempting fraud.

The Imperial v. Sogomonian case and many similar cases is why I am convinced that giving no quarter to a fraud perpetrator is the best way to deter and defeat insurance fraud.

What every insurer should know about how it can be proactive in the efforts against insurance fraud by refusing to pay every fraudulent claim, by refusing to settle litigation brought by fraud perpetrators and by proactively taking the fraud perpetrators to court by seeking damages for common law fraud and take the profit out of insurance fraud.

Some insurers are buying Artificial Intelligence software to detect insurance fraud. Others hire retired police officers to operate the SIU and ignore their experienced insurance claims handlers.

On an individual claim basis it is never cost effective to reject the claim for fraud. 

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